Bloomberg News

Sony Revamps TV Business After Seven Straight Annual Losses

November 02, 2011

Nov. 1 (Bloomberg) -- Sony Corp., struggling to rebound from seven consecutive annual losses in television manufacturing, reorganized the business into three groups.

One group will oversee the liquid-crystal-display operations, another will coordinate contract manufacturing and a third will oversee the development of next-generation sets, a spokeswoman, Ayano Iguchi, said by telephone. The changes take effect today, one day before the company announces earnings.

Sony, which sells products ranging from PlayStation game consoles to life insurance, is struggling to compete against Samsung Electronics Co. and low-cost TV set maker Vizio Inc. in an industry where sales have flattened in developed countries. Chief Executive Officer Howard Stringer has said TVs remain vital to the Tokyo-based company’s sales of related products, including Blu-ray players and video cameras.

The company makes LCD and LED TVs, sets that connect to the Internet using Google Inc.’s Android operating system and models that let users watch video in 3-D. The company uses other manufacturers, including Taipei-based Hon Hai Precision Industry Co., to produce lower-end sets.

Sony has indicated it will create a separate unit to handle the commodity hardware side of the TV business, said Ben Bajarin, director of consumer technology practice at consulting firm Creative Strategies Inc. in Campbell, California.

Smart TVs

The other units would be free to work on so-called smart TVs, which are more expensive sets that can pull content off the Internet, Bajarin said in an interview. These groups also would look at using Sony’s music, movie and video-game assets in high- end TVs, tablets and smartphones.

“They are taking a much harder look at the three pillars of their business,” Bajarin said. “It makes sense for them to have more of the manufacturing side outsourced.”

Investors have been awaiting the company’s turnaround plan after Sony, Japan’s largest exporter of electronics, announced in August that a strategic review of the business was under way.

“Sony needs to focus on the strength of its mobile and set products,” Eiichi Katayama, an analyst with Bank of America Merrill Lynch in Tokyo, wrote yesterday.

Other Japanese TV manufacturers also are trying to turn around their business. Panasonic Corp., the maker of Viera televisions, yesterday forecast its biggest annual loss in 10 years and cut its annual TV sales target to 19 million from 25 million.

Toshiba Corp., the maker of Regza televisions, said profit fell 19 percent as a strengthening yen eroded overseas sales. The falling prices of TVs and the end of a sales boom triggered by switching to digital broadcasts in July hurt Toshiba’s audiovisual division, the company said in a statement yesterday.

The company’s TV business had an operating loss of at least 10 billion yen in the six months ended Sept. 30, Corporate Executive Vice President Makoto Kubo said.

--With assistance from Naoko Fujimura in Tokyo. Editors: Donna Alvarado, Stephen West

To contact the reporters on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net; Takashi Amano in Tokyo at tamano6@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net; Michael Tighe at mtighe4@bloomberg.net


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